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Bitcoin Basics Lesson 6: How to Buy Bitcoin!

In Lesson 5, you learned that bitcoin transactions are not encrypted and can be viewed by anyone using a blockchain browser. You also learned transactions need to be verified by miners on the blockchain network, who are then rewarded with bitcoins for verifying and timestamping the transactions.

In Lesson 6 you will learn:

Bitcoin is sold and purchased much like other currencies through exchanges using a credit card, bank wire, Paypal, etc.

You can also exchange bitcoins for goods and services with people directly, just like you would with cash.

Buying Bitcoin and How Exchanges Work

Bitcoin can be bought and sold from various sources, online and offline, like any other currency. You can purchase BTC online directly with a credit card, or use an exchange or brokerage service that will enable you to buy bitcoin via a bank transfer. Some applications also offer buying and selling bitcoin with PayPal and other online payment processors. Some of these sites are full-service exchanges intended for institutional traders, while others are simpler wallet services with limited buying and selling capabilities.

Most exchanges and wallets can store digital and fiat currency for you, functioning like a regular bank account. Exchanges and wallets are the go-to option if you want to do regular trading and speculating. Beware of the fact that total anonymity is difficult to achieve at these sites. Also, there are setup procedures which usually involve supplying proof of identity and detailed personal information. Bitcoin can also be purchased locally from other people via marketplaces e.g. LocalBitcoins, and from Bitcoin ATMs that operate just like the cash ATMs you see worldwide. These servicess offer higher anonimity, but tend to charge higher fees.

This ends today’s lesson. You have learned bitcoin can be purchased and sold much like other currencies through exchanges. You know you can exchange bitcoins with other people directly, just like with cash.